An outlook: The Indian paper industry

India consumes 11.4 million tonnes of paper products (excludes newsprint). This is expected to go up to 20 million tonnes by 2025. Sriraam Selvam looks at trends in the Indian paper market.

11 Dec 2012 | By Sriraam Selvam


The Indian paper industry has been going through a drop in demand. This coupled with increasing operational costs has seen reduced profits but that hasn’t dampened the manufacturers in carrying forward expansion plans or invest in new products or technology. Chennai-based Seshasayee Paper and Boards is all set to merge SPB Papers, formerly Subburaj Papers, a 90,000 tonne a year paper mill in Tirunelveli, that it acquired in February 2011. This will add to Seshasayee Paper’s 1.15-lakh-tonne capacity.
Alternate raw material
“The raw material costs especially of wood and wood pulp has literally doubled particularly due to the expansion of plywood manufacturing companies,” says G P Goenka of Kolkata-based Star Paper Mills.
Recently, the company announced its plans of using agri byproducts such as ‘bagasse’ as feedstock. Star has its only manufacturing unit in Saharanpur, Uttar Pradesh and produces nearly 80,000 tonnes annually. In 2011-12, the company reported a dip in sales to Rs 239-crore from the previous year’s turnover of Rs 270-crore.
“We are expecting this project to take shape in a year’s time and we are already talking to the local farmers for procurement” says Goenka. 
“We would also be investing nearly Rs 70-crore as capital expenditure to make our units and machinery adaptable to bagasse,” he adds
The company targets a 50% of its 100,000 tonnes of wood requirement to be replaced with bagasse in this effort.
The increased raw material cost has resulted in significant price correction in the industry and JK Papers recent announcement of possible hike in their price again for their uncoated paper is case in point.
“The last price hike was not adequate to cover the rise in raw material prices. We could look at another hike of about Rs 1,000 a tonne for these products in early December,” says A K Ghosh, vice-president of marketing.
The market’s leading manufacturers of copier papers produce about 1.50-lakh tonnes of non-coated paper products, with its total production capacity being 2.94-lakh tonnes. It has a 28% market share in the domestic copier paper segment, which is currently estimated at 5.51-lakh tonnes.
Increasing capacity
JK Papers also announced the launch of new high-end products such as pigmented office paper and corrugated paper.
“We have set up a facility at our new plant coming up in Odisha to produce 2,700 tonnes of pigmented paper a month, which will totally substitute the imports. This grade of paper is seeing a growth of 15-16% annually,” says Ghosh.
The company’s new plant is coming up beside its existing one in Odisha, involving a capacity of 1.65-lakh tonnes per annum and an investment of Rs 1,650-crore. The new plant is expected to go on stream in the first quarter of 2013-14, taking up its total capacity to 4.55 lakh tonnes per annum.
In an effort to be self-sufficient and with a strategy to meet the future demands Tamil Nadu Newsprints and Papers Limited has commissioned a 300-tonne-a-day de-inking plant to generate paper pulp from used paper.
This adds to the company’s existing capacity of 840-tonne-a-day of bagasse and thereby eliminate the need to import costly pulp  and safeguard from the volatility of the market.
The company is also strengthening its raw material capacity by expanding its pulpwood plantation programme with over 1,00,000 acres of plantations this year. As of 2011-12, it had brought over 82,000 acres under pulpwood plantation by involving more than 15,000 farmers. This gives the company over 2.76-lakh tonnes of pulpwood annually, which is more than half its requirement of pulp wood.
Green values
In a recent workshop of the Indian pulp and paper technical association the focus was on adapting and identifying environment-friendly practices to enable sustained development.
“Responsible paper production with focus on environment, energy and costs are key to sustainable development. The need is to focus on clean production technologies with lower carbon emissions for improvement in mitigating adverse impact of climate change goes hand in hand with efficiency and cost management,” says N Gopalaratnam, chairman and managing director, Seshasayee Paper and Boards.
Meanwhile in 2011, Tamil Nadu Newsprint and Paper Limited (TNPL) mill in Karur in Tamil Nadu received the Pulp and Paper International (PPI) Award 2011. The PPI Award 2011 in Brussels, organised by Resource Information Systems Inc (RISI) is for Environmental Strategy of the Year.
S V Subrahmanyam, general manager TNPL, says, “TNPL follows a philosophy of improving its operation through better environmental management. Through multi-year projects, water consumption per metric tonne of paper was reduced by 40% from 2007 to 2011. Likewise another project resulted in a 39% decrease of discharges.”
TNPL produces newsprint; printing and writing paper using bagasse, as primary raw material. TNPL completed the expansion plan during December 2010 to increase the capacity to 4,00,000 tonne per year.
Potential market in Pakistan
The recent permission to allow import of newsprint from India has opened hope for greater market potential in the neighbouring country which is widely expected to free import of other varieties of paper by the year end as well.
“Pakistan needs about 4-lakh tonnes of paper, annually, but the domestic production, mostly from recycled paper, meets just about half the requirement. The balance is imported from Europe and elsewhere,” says Khamis Saeed Butt, president, All Pakistan paper merchants association.
The Indian paper industry is expected to cater to at least one-fourth of Pakistan’s imports and is expected to add cheer to the industry.
ITC: Focus on packaging
Paperboards capacity is set to increase at ITC’s Bhadrachalam plant. ITC will start its expanded operation by the end of October, 2012.
S N Venkatraman, vice president - marketing at ITC’s paperboards and specialty papers division (PSPD), says, “The company’s spend on the pulp mill at the plant will enable the company to enhance it capacity by 1,00,000-tonnes per annum and tap into the packaging market.”
“The packaging market is growing. Normally we say there’s a 1:1 correspondence between the GDP and the packaging market growth. But the top-end, the ones with value-added board has been growing at the rate similar to the top-line consumer segment, and that has been reporting a 15-20% growth,” says Venkatraman.
He adds, “With PSPD, we have been growing for the last five-six years, and if you see the top-line growth which on an average is double-digit; close to 15%.”
ITC was the first company to use virgin elementary chlorine free (ECF)material for its paper pulp, allowing Indian companies to source paperboards and specialty paper locally. “We were the pioneers in this area,” states Venketaraman.
“Today the papers are made from pulp which has been bleached using ozone. It makes the production far cleaner and sustainable. Further the main paperboard lines at Bhadrachalam are certified to BRC-IOP (British Retail Consortium - Institute of Packaging) standards offering the best boards for food, pharma and beverage cartons “
The expanded capacity at ITC will enable the company to produce three main grades – the folding box boards; the solid bleached boards and the barrier coated boards, but it will decide which products to produce on which machine. “For us this expansion is an opportunity to shorten our turnaround time for delivery of these products in the marketplace and offer exemplary customer service backed by our pan-India supply-chain model of servicing customers,” concludes Venkatraman.